Can Section 1231 losses be used to offset K-1 income (nonpasive) or self employment income?

[trisha0790]

Taxpayers sold business property in 2017 at a loss and generated $471,000 section 1231 losses.  This year they have over $100,000 K-1 income from a business (100% shareholders in an S-corporation) as well as $150,000 self employment income.  I thought 1231 losses could offset ordinary income but program isn't taking the losses into consideration and offsetting either of these income streams.  Did I miss the boat?  Thank you in advance to anyone who is taking the time to respond this late into tax season!!!

[Accountant-Man]

What happened in 2017 with those losses? Were they used in 2017? Are they being carried over?

[trisha0790]

Wow - you replied before I had a chance to delete my dumb question.  After dinking around with the program (as if there isn't enough to do on March 28th) I realized when the code says the losses can offset "ordinary" income I took it to mean any kind of income.  It appears the losses will only offset gains from sales of other business property income.  Thank you for taking time to respond. I'll delete the question after I know you received my 'Thank you"

[Accountant-Man]

Gotcha.